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Tuesday, March 11, 2014

Friedman's Capitalism Ch. 1 and 2 Summary

In Capitalism and Freedom Milton Friedman outlines the ideal values of Capitalism in a Democratic society. He argues for a free market with limited government roles. He says the only involvement government should have in society is protecting law and order, protecting property, monitoring monopolies and "neighborhood effects." He defines "liberals" as people who highly value freedom, and thus little government involvement. The ultimate goal behind Capitalism and Democracy should be economic and political freedom. He believes economic freedom can exist in a totalitarian state, but political freedom cannot exist without economic freedom--even to say that economic freedom is what lead to political freedom. Economic freedom is a part of freedom itself, but it also brings out political freedoms. For example, you cannot criticize the government if the government funds your business. In order for economic freedom to exist in a politically free society, participants must both know they equally benefit from transactions, and that one individual's action doesn't not impose on another's action. The biggest threat to freedom is coercion, which is why Friedman thinks it is very bad for government and business to consolidate. Separation of economic and politic powers are good (although it is more difficult to disperse political power).

The government's role is to judge individual's free actions which impose on one another, for each person as a right to their own freedom, but should not impose on others too much. This is where the government plays a role in one aspect. This is why the government exists. Monitoring monopolies is another very important role because it imposes on individual's freedoms. Some monopolies, like technical monopolies, are natural. When these occur, there are three modes of dealing with them: private monopolies, public monopolies, and public regulation. Different situations better suit the different choices. "Neighborhood effects" are economic exchanges that effect a community, and the government needs to decide whether or not this exchange can exist without government involvement--which is difficult sometimes. Government has control of money because it has forever been generally universally accepted as a government role. Finally he describes the paternalistic ground for governmental activity due to children and madmen irresponsible, ergo do not have freedom. This is a difficult fact for liberals to accept.